The Loftstedt Report – A Summary

Professor Ragnar Löfstedt’s review of health and safety regulation was published on Monday 28th November. On the same day the Government issued its response to the report and we have summarised the main recommendations below.

The Löfstedt’ Report follows on from the recommendations of Lord Young’s Report, Common Sense Common Safety and seeks to expand on its work to reduce the regulatory burden on business. Professor Löfstedt is the Director of the Centre of Risk Management at King’s College London.

The Government’s response identifies six key areas where it will take action as a priority:

  • Exempting the self-employed from health and safety law if their work activities pose no threat to others. The Government claims that this will bring UK regulation more in line with other European countries, and cut unnecessary red tape for around one million people. It is scheduled to be in place by 2013 but will be complicated to enforce for those self employed people working on larger sites and workplaces as it is likely that clients and main contractors will still want ot see their reputation and safety record protected.
    The Health and Safety Executive to gain powers to direct local authority health and safety inspection and enforcement, and to become the “Primary Authority” for multi-site national organisations. This should significantly reduce uncertainty as to enforcement in particular. However the Government qualified its backing by warning of an “even more centralised approach”, so it remains to be seen whether there will be a fundamental shift in power from local authorities to the HSE bringing with it the possibility of the £124 per hour Fee For Intervention being levied on all UK exterprises regardless of size or enforcing authority – a worrying as[ect for smaller SME’s.
  • Sensible civil procedure and liability rules. Professor Löfstedt found that taken as a whole the health and safety regulations were appropriate. However, two of his recommendations are being taken up by the Government as a priority. Firstly, the Review suggests that the standard disclosure lists found in the Pre-Action Protocols are being interpreted in an overly restrictive fashion by firms and advisors, encouraging a bureaucratic approach to health and safety documentation which is unwarranted. Löfstedt wants the original intention – to encourage the sharing of information – to be clarified and restated to ensure that firms are not encouraged to believe that the absence of documentation is in itself a ground for liability. Secondly, Löfstedt recommends that each regulation should be reviewed to ensure that any strict liability rules are there because they are required as a minimum by European law, and replacing them by the more proportionate “reasonable practicability” test when European law does not dictate no-fault liability.
  • Reviewing the Approved Codes of Practice. The report suggests these documents are too complex and “legalistic”. The aim is to ensure duty-holders are informed of the scope of their obligations in plain English. The first phase of this is to be completed by the HSE in June 2012 and duty-holders will be informed then of impending changes.
  • Consolidating sector-specific regulation. The Government has accepted that the piecemeal regulation of high-risk industries using separate regulations is largely burdensome and confusing. This task is to be completed by April 2015. Professor The report also suggests a small number of unnecessary regulations which the Government plans to scrap following consultation. Through these means the Government plans to cut the total number of regulations with which businesses have to comply by 50% but the true impact of this is likely to be low when clear duties of care remain.
  • Engagement with the EU regulatory process to ensure that law is risk-based and evidence-based. In particular the Review recommends that there should be a European Parliament Committee to scrutinise European health and safety regulation. The Government suggests that British diplomacy has already achieved a breakthrough over the summer in causing the establishment of an impact assessment unit within the European Parliament.

Comment by Roger Hart, MD C&G Safety

Despite the headline grabbing figure of 50% of total regulations will be removed the impact f business is unlikely to be felt. The spectre of No win No fee and past experience are likely to encourage those businesses large enough to make changes in their arrangement to be slow to react to any reduction in legal burden.

Self employed people could see dome benefit but on higher risk activities where these persons are engaged to work for larger clients we will be surprised to see a change from current requirements as the systems in place are well established and the potential for vicarious liability remains.

This is not to say that the report will not have an impact and anything which reduces burden whilst maintaining our good national safety record is a positive step, particularly in the current economic climate. However, it is worthy of note that the report will do nothing to address the issue of spurious no win no fee claims and the industry which surrounds it and has done little to investigate the ‘gold plating’ of EU Regulation as it is translated into UK law.

Copies of the Löfstedt Report and the Government’s response can be found on the Department for Work and Pensions website: http://www.dwp.gov.uk/policy/health-and-safety/

HSE Board approves cost recovery scheme

The HSE Board today (7 December) agreed that from April next year the HSE will charge duty-holders who materially breach health and safety law an hourly rate of £124 for its intervention. This has been reduced slightly from the original consultation figure of £133 per hour and the cost will also now be counted from when a letter or e-mail recording the duty-holder’s breach is sent rather than applying from the start of the visit.

The recent consultation on the fee-for-intervention scheme (FFI) – part of the Government’s ‘Good health and safety – good for everyone’ framework unveiled in March gained 300 responses and the HSE also held face-to-face dialogue with some 80 trade associations and companies.

Seven key concerns were identified as being raised by the majority of consultees:

  • A change in priorities by the HSE in order to maximise its receipts;
  • Damage to the constructive relationship between the regulator and business;
  • The definition of ‘material breach’ and reliance on individual inspectors’ opinions, or judgements;
  • The ‘trigger’ for implementing FFI;
  • Whether or not local-authority regulators should be included in the scheme;
  • The financial impact on businesses – particularly SMEs; and
  • The integrity of the disputes process.

Gordon MacDonald, programme director for the scheme, told the Board that these concerns were common to most respondents, whether they were for or against. Some of them, he said, could be addressed fairly easily – such as by issuing guidance on what constitutes a material breach, and translating the regulator’s Enforcement Management Model (EMM) into ‘lay’ language so that people can better understand how inspectors operate within defined policies and procedures when making judgements.

As the majority of respondents were against including Local Authorities within the scope of the scheme, the Board agreed that they would be excluded.

Comment from Roger Hart, MD, C&G Safety
The concerns we have centre on the following key issues;

  1. Business have been ‘swopped’ between LA and HSE enforcement over the years, this is now a two tier system with some businesses being threatened by the potential for FFI bills and others, who operate exacly the same business but remain under LA control, not having to contend with this, is this fair?
  2. As HSE comes to rely on the receipts from FFI fees, will this bring a difference in enforcement styles? Inspectors will surely have some pressure on them to produce a number of receipts within a region with budgets having been so stretched over recent years.
  3. How will the relationship between regulator and the regulated be affected by this? Up until now an Inspector was there to see risks controlled for the benefit of all, now they could be adding to the cost benefit analysis in a negative way. If it costs £5,000 to control the risk and the FFI bill comes to £2,500 where does that leave the business and its employees in terms of cost benefit analysis?
  4. How will ability to pay be accounted for (if at all)? Two businesses in the same sector with the same number of employees can make vastly different profits. Similarly, some businesses may simply be unable to pay in the current climate but this will be complex knowing that Treasury rules will bind HSE t recovering it full costs.
  5. Who will monitor the process to ensure it is both fair and equitable? HSE cannot be both judge and jury but who will be best placed to decide on what is fair?

We must put this in perspective, it is likely that the businesses affected will be less than 1% of all UK enterprises but, with talk of £40m being a likely figure for FFI receipts in the first year, the impact on those unlucky enough to see the scheme working first hand could be significant. Our advice is to review your Enforcing Authority, if you’re a lower risk business and have been passed to HSE from LA control perhaps its time to request to return.